About
HEG Ltd
HEG Limited, incorporated in Oct' 72, is a leading manufacturer and exporter of graphite electrodes in India and operates world's largest single-site integrated graphite electrodes plant at Mandideep in Madhya Pradesh. The company also operates three power generation facilities with a total rated capacity of about 76.5 MW. The power generation primarily fuels the graphite electrode manufacturing operations, with the surplus being sold in the open market.
The company produces two grades of graphite electrodes, High Power and Ultra High Power, which are manufactured according to the customers' needs and requirements. The company is a major exported of graphite electrode, with a number of respected steel manufactures, namely ArcelorMittal, POSCO, Thyssenkrupp, US Steel, Nucor and Usinor in their customer base.
HEG Ltd (earlier known as Hindustan Electro-Graphites Ltd) was incorporated in the year 1977. The company is a premier company of the LNJ Bhilwara group. They started as an importer of electrodes and latter turned to production of Graphite electrodes with financial and technical assistance from La Societe Des Electrodes Et Refractories Savoi, a subsidiary of Pechiney, France.
In the year 1992, the company and Rajasthan Spinning & Weaving Mills Ltd jointly promoted a 100% export oriented unit for cotton mills went into production. During the year 1995-96, the company completed the 9216 spindles and modernization of Rishabhdev unit with Autocover at a total cost of Rs 33 crore.
During the year 1996-97, the company expanded the graphite division to the total capacity of 24000 tons. They commissioned the 13.5 MW Tawa hydroelectric power plant, the first hydroelectric project by private sector in the state of Madhya Pradesh. Also, they commissioned the 12.8 MW co-generation power unit during the year.
During the year 1998-99, Rishabhdev unit successfully commissioned a 4.2 MW Wartsaila Generating set for captive consumption of the Textile Division. During the year 2000-01, the company exited from the telecom sector, which was a joint venture with Motorola as the same was not germane to the existing businesses.
During the year 2001-02, the company expanded the installed capacity of Graphite Electrodes to 30000 MT per annum at a cost of Rs 47 crore and they discontinues the operations at their textile unit in Jammu as the unit became unviable during the year 2002-03.
The company de-merged the textile business located at Rishabhdev in Rajasthan with effect from April 1, 2003, which was merged with the Rajasthan Spinning & Weaving Mills Ltd. They set up a new kiln with an additional capacity if 30000 MTPA for Sponge Iron during the year 2003-04.
During the year 2004-05, the company increased the production capacity of Graphite Electrodes at Mandideep from 30000 to 52000 MT per annum. Also they commissioned a new 25 MW Captive Power Plant at Mandideep. The company entered into a joint venture with Statkraft Norfund Invest AS (SN Power), Norway for setting up Hydro Power Generation projects in India. Also, they added another prestigious partner, International Finance Corporation, Washington, as Equity Holders in the AD Hydro Power Project.
During the year 2005-06, the company acquired Jaipur Polyspin Ltd to manufacture Synthetic dyed Blended Yarn. Also, they acquired an open-end plant with 1680 rotors from Phillipines. The company introduced ready-to-wear Apparels, manufactured at a newly set up unit in Bangalore. Also, they commissioned Hydro Electric Project in Malana.
In April 2007, the company made an investment of Rs 35 crore towards de-bottleneckingin the graphite electrode plant. In July 2007, the company sold their fully integrated steel business, which includes sponge iron, steel billets and a 13MW waste heat recovery power system power plant to Jai Balaji Industries Ltd of Kolkata.
HEG Ltd ramped up production during the later part of the financial year 2013-14 to fulfill customer's delivery commitments. During the year under review, the company widened its raw material supplier base, optimised its power consumption, improved operational efficiencies and achieved new customer approvals.
FY 2015 was one of the most challenging years for HEG Ltd as the graphite electrode industry saw erosion in margins. During the year under review, HEG Ltd took major initiatives to usher in qualitative improvement. A keen emphasis was laid on optimising costs across all operational and commercial areas. The company's focus on reducing working capital continued to show improvements in the level of plant inventories, receivables and other current assets, thereby releasing cash for productive purposes.
During the financial year ended 31 March 2016, HEG Ltd focused on improving operating and cost parameters to counter the impact of fall in graphite electrode prices. By reformulating its operational management discipline and undertaking several cost-cutting measures HEG Ltd was able to reduce the impact of declining profit margins. Reduced capacity utilisation as a result of reduced demand, provided the time and space to the management to figure out ways and means to efficiently utilise the capacities at its disposal. New recipes for both electrodes and nipples were introduced for better quality. A keen emphasis was laid on optimising costs across all operational and commercial areas. The company's effort to match reduced levels of capacity utilisation with corresponding reduction in working capital paid off.
HEG's thermal plant continued to operate at significantly reduced levels during the year. The company continued to optimise coal consumption and usage of power.
The Board of Directors of HEG Ltd at its meeting held on 30 May 2017 accorded its in-principle approval for closure of its wholly owned subsidiary i.e. HEG Graphite Products and Services Limited. This wholly owned subsidiary was incorporated in the year 2009 but never carried out any commercial operation.
The financial year ended 31 March 2018 was a record year for HEG Ltd largely driven by favourable tailwinds- robust growth in demand even as supply remained constrained, leading to a significant rise in product price realisation. This resulted in the best ever financial numbers. The company registered its ever highest ever net profit of Rs 1,081.34 crore. The company registered the highest electrode production at 64,000-plus MT in 2017-18 against 50,000 MT level in 2016-17. Even as demand surged, the company continued to strengthen its operational efficiencies. The company repaid its entire long-term debt and has plans to invest the cash surplus in avenues that enable it to sustain its growth momentum.
During the Financial Year 2018-19, the paid up share capital of the Company was reduced from Rs 39,95,91,420 to Rs 38,59,55,060 owing to Buyback of 13,63,636 Equity Shares of Rs 10 each.
During FY 2019-20, the Company acquired 3,23,51,004 equity shares of Bhilwara Energy Ltd. from other shareholders for a consideration of Rs 162.05 Crores and post the above acquisition of shares, the holding of Company in BEL, was increased from 29.48% to 49%.
During the year 2022-23, the Company incorporated a whollyowned subsidiary in the name of TACC Limited.
HEG Ltd
Chairman Speech
"I AM EXCITED ABOUT THE FUTURE OF HEG AS WE"I AM
EXCITED ABOUT HAVE TAKEN DEFINITIVE STEPS TAKEN DEFINITIVE TO BETTER OUR PROSPECTS BEYOND
TOMORROW. I AMPROSPECTS BEYOND CONFIDENT THAT WE WILLTHAT WE WILL ACHIEVE ACHIEVE
REMARKABLE SUCCESS IN OUR FUTUREOUR FUTURE ENDEAVOURS."
Dear Shareholders,
It is a pleasure to connect with you through this statement, for, it
provides an opportunity to ink my thoughts. I am delighted to mention that your Company
registered a good performance in the face of strong headwinds which restrained global
progress in the past year, evidenced in the de-growth of the steel sector, a critical
proxy to economic growth.
Allow me to throw in a few numbers to put our performance into
perspective. The world produced less steel - 1885 mmt in CY 2022 against 1962 mmt in 2021
- a drop of 4%. More pertinently, the steel world, excluding China and Iran, our market
place, registered a drop in steel production by 7.5%, resulting in drop in demand for
graphite electrodes.
In the face of this dismal global steel landscape, our sales volumes
decreased by 13% although revenue from operations grew by 12%. Our capacity utilisation
was amongst the highest in the industry at close to 90%.
Furthermore, despite persistent and elevated inflation that prevailed
across the globe, our EBITDA went up by 20%, and we reported a Net Profit of H456 crore
– a jump of 17% over the previous year. We successfully navigated the challenges
driven by our commitment to innovation, customer satisfaction and operational e_ciency.
Fiscal 2023 holds special significance, as we are on threshold of
emerging as the largest graphite electrode facility with a capacity of 100,000 tons under
one roof in the Western world. By the end of the fiscal, we were very close to the
completion of the project, with four of the five electrode-making processes up and running
and the fifth at the final stage of completion. We expect to fully commence operations of
our expanded capacity soon. This is a happy milestone for me and the entire HEG team, who
have worked tirelessly and with an unwavering dedication to elevating the Company into a
new growth orbit despite the gloom and doom period of pandemic all around the Globe
The expansion showcases our passion for technological innovation,
placing us at the forefront of the industry with some of the best and latest equipments
and technologies we have put under one roof. It positions HEG in the right place at the
right time.
Our tomorrow
Our drive to move against the tide continues in the current year as the
prevailing geopolitical current casts a bearish shadow on the global steel industryRs.s
prospects. Experts of the steel sector feel that the steel demand will remain impacted by
the fear of a global recession. Our industry cannot remain untouched but, rest assured, we
will continue to strive hard to sustain profitable business growth in the current year
too.
Beyond tomorrow
The medium- to long-term growth in our consumer segment - Electric Arc
Furnace Steel production, is clearly very promising. My optimism stems from the
de-carbonisation narrative that will continue to play out over the foreseeable future.
Climate change and sustainability have become the pivotal factors in
long-term business. Embedding sustainability into business strategies and investment
blueprints has become a necessary mandate in each and every country around the Globe -
rich or poor.
This is particularly relevant for the global steel sector. World Steel
Association studies reveal that the global steel sector alone accounts for between 7% to
9% of global carbon emissions.
But this is changing and changing fast. The Blast furnace (BOF) route
for steel making is fast giving way to the Electric Arc furnace (EAF) route in a very
rapid way, which the world has not seen in decades owing to significantly less emissions
by the latter. As per the World Steel Association, Electric Arc Furnace share of steel
production (ex-China) has increased from 44% in 2015 to 49% in 2022, and is likely to
reach around 55% in a few years.
Global steelmaking is undergoing a structural shift - with 50 to 60 mmt
of Greenfield steelmaking capacity being established using the Electric Arc Furnace at an
estimated investment of about US$ 50 to 60 billion all over the world . Of this, about 25
mmt is expected to come up in the U.S. alone, which already produces 70% of its steel
through EAF. Similar new announcements keep coming from European and other countries large
Steel companies all over the world. We have been consistently exporting between 65% to 75%
of our production for more than last 10 years. All these will require graphite electrodes
for which we are ready with our additional capacity.
From a long-term perspective, we believe that the Electric Arc Furnace
route for steelmaking will grow at a 3% CAGR in the next decade - much more than the
overall Steel production growth translating into a substantial increase in electrode
demand.
While the demand prospects appear promising, barring unforeseen
adversities, the supply position appears largely stable. No other Graphite Electrode
company has announced any new capacity. Moreover, between 2018 and 2022, due to Covid
related slump in demand, about 60,000 tons of graphite electrode capacity around the world
has shut down their operations.
Our longstanding presence in international markets coupled with timely
expansion of our plant from 80,000 to 100,000 mt per annum strengthens our confidence in
HEGRs.s ability to envision opportunities in the electrode industry and to meet future
demand all over the world.
We will leverage our extensive global market reach across 35+ countries
globally, which we have diligently cultivated over the past 25 years, to capitalise on
emerging profitable growth opportunities to create value for our stakeholders.
Building a new opportunity
India is passionate about its e-mobility ambitions as a critical tool
in its Net Zero commitment. The GovernmentRs.s encouraging policies have enhanced the
positivity around the e-mobility space. This has increased the spotlight on
lithium-ion-based energy storage solutions. Currently, cells and battery packs are largely
imported into India.
Witnessing the fast-altering mobility ecosystem, we anticipate a huge
domestic demand for graphite anode as cell manufacturing shifts to India. We are
diversifying into graphite anode for lithium-ion cells, which forms the battery for
electric vehicles and energy storage systems.
Given that itRs.s the first such plant coming into our country, we see
a huge opportunity here in the long term.
We have incorporated a wholly-owned subsidiary of HEG in the name of
TACC Limited for this new business. Our Board has approved a budget of C1,000 crore for
setting up a manufacturing facility of 10,000 tons of anodes per annum in Phase 1.
Our new project is progressing well. We are about to start our pilot
plant, which will facilitate trials and tweaks as necessary. The location has been
decided. The land acquisition is under process, and we expect to complete the projectRs.s
first phase by mid-2025.
I am excited about the future of HEG as we have taken definitive steps
to better our prospects beyond tomorrow. I am confident that we will achieve good success
in our future endeavours. With the support of our experienced leadership team, I am
certain that we will maintain our longstanding track record of superior performance,
ultimately creating value for all our stakeholders.
In conclusion, I express my sincerest gratitude to every stakeholder
for their contribution to our journey so far. Without them, we would not have reached
where we are today.
| Warm regards, |
| Ravi Jhunjhunwala |
| Chairman, Managing Director |
| & CEO |
  Â
HEG Ltd
Company History
HEG Limited, incorporated in Oct' 72, is a leading manufacturer and exporter of graphite electrodes in India and operates world's largest single-site integrated graphite electrodes plant at Mandideep in Madhya Pradesh. The company also operates three power generation facilities with a total rated capacity of about 76.5 MW. The power generation primarily fuels the graphite electrode manufacturing operations, with the surplus being sold in the open market.
The company produces two grades of graphite electrodes, High Power and Ultra High Power, which are manufactured according to the customers' needs and requirements. The company is a major exported of graphite electrode, with a number of respected steel manufactures, namely ArcelorMittal, POSCO, Thyssenkrupp, US Steel, Nucor and Usinor in their customer base.
HEG Ltd (earlier known as Hindustan Electro-Graphites Ltd) was incorporated in the year 1977. The company is a premier company of the LNJ Bhilwara group. They started as an importer of electrodes and latter turned to production of Graphite electrodes with financial and technical assistance from La Societe Des Electrodes Et Refractories Savoi, a subsidiary of Pechiney, France.
In the year 1992, the company and Rajasthan Spinning & Weaving Mills Ltd jointly promoted a 100% export oriented unit for cotton mills went into production. During the year 1995-96, the company completed the 9216 spindles and modernization of Rishabhdev unit with Autocover at a total cost of Rs 33 crore.
During the year 1996-97, the company expanded the graphite division to the total capacity of 24000 tons. They commissioned the 13.5 MW Tawa hydroelectric power plant, the first hydroelectric project by private sector in the state of Madhya Pradesh. Also, they commissioned the 12.8 MW co-generation power unit during the year.
During the year 1998-99, Rishabhdev unit successfully commissioned a 4.2 MW Wartsaila Generating set for captive consumption of the Textile Division. During the year 2000-01, the company exited from the telecom sector, which was a joint venture with Motorola as the same was not germane to the existing businesses.
During the year 2001-02, the company expanded the installed capacity of Graphite Electrodes to 30000 MT per annum at a cost of Rs 47 crore and they discontinues the operations at their textile unit in Jammu as the unit became unviable during the year 2002-03.
The company de-merged the textile business located at Rishabhdev in Rajasthan with effect from April 1, 2003, which was merged with the Rajasthan Spinning & Weaving Mills Ltd. They set up a new kiln with an additional capacity if 30000 MTPA for Sponge Iron during the year 2003-04.
During the year 2004-05, the company increased the production capacity of Graphite Electrodes at Mandideep from 30000 to 52000 MT per annum. Also they commissioned a new 25 MW Captive Power Plant at Mandideep. The company entered into a joint venture with Statkraft Norfund Invest AS (SN Power), Norway for setting up Hydro Power Generation projects in India. Also, they added another prestigious partner, International Finance Corporation, Washington, as Equity Holders in the AD Hydro Power Project.
During the year 2005-06, the company acquired Jaipur Polyspin Ltd to manufacture Synthetic dyed Blended Yarn. Also, they acquired an open-end plant with 1680 rotors from Phillipines. The company introduced ready-to-wear Apparels, manufactured at a newly set up unit in Bangalore. Also, they commissioned Hydro Electric Project in Malana.
In April 2007, the company made an investment of Rs 35 crore towards de-bottleneckingin the graphite electrode plant. In July 2007, the company sold their fully integrated steel business, which includes sponge iron, steel billets and a 13MW waste heat recovery power system power plant to Jai Balaji Industries Ltd of Kolkata.
HEG Ltd ramped up production during the later part of the financial year 2013-14 to fulfill customer's delivery commitments. During the year under review, the company widened its raw material supplier base, optimised its power consumption, improved operational efficiencies and achieved new customer approvals.
FY 2015 was one of the most challenging years for HEG Ltd as the graphite electrode industry saw erosion in margins. During the year under review, HEG Ltd took major initiatives to usher in qualitative improvement. A keen emphasis was laid on optimising costs across all operational and commercial areas. The company's focus on reducing working capital continued to show improvements in the level of plant inventories, receivables and other current assets, thereby releasing cash for productive purposes.
During the financial year ended 31 March 2016, HEG Ltd focused on improving operating and cost parameters to counter the impact of fall in graphite electrode prices. By reformulating its operational management discipline and undertaking several cost-cutting measures HEG Ltd was able to reduce the impact of declining profit margins. Reduced capacity utilisation as a result of reduced demand, provided the time and space to the management to figure out ways and means to efficiently utilise the capacities at its disposal. New recipes for both electrodes and nipples were introduced for better quality. A keen emphasis was laid on optimising costs across all operational and commercial areas. The company's effort to match reduced levels of capacity utilisation with corresponding reduction in working capital paid off.
HEG's thermal plant continued to operate at significantly reduced levels during the year. The company continued to optimise coal consumption and usage of power.
The Board of Directors of HEG Ltd at its meeting held on 30 May 2017 accorded its in-principle approval for closure of its wholly owned subsidiary i.e. HEG Graphite Products and Services Limited. This wholly owned subsidiary was incorporated in the year 2009 but never carried out any commercial operation.
The financial year ended 31 March 2018 was a record year for HEG Ltd largely driven by favourable tailwinds- robust growth in demand even as supply remained constrained, leading to a significant rise in product price realisation. This resulted in the best ever financial numbers. The company registered its ever highest ever net profit of Rs 1,081.34 crore. The company registered the highest electrode production at 64,000-plus MT in 2017-18 against 50,000 MT level in 2016-17. Even as demand surged, the company continued to strengthen its operational efficiencies. The company repaid its entire long-term debt and has plans to invest the cash surplus in avenues that enable it to sustain its growth momentum.
During the Financial Year 2018-19, the paid up share capital of the Company was reduced from Rs 39,95,91,420 to Rs 38,59,55,060 owing to Buyback of 13,63,636 Equity Shares of Rs 10 each.
During FY 2019-20, the Company acquired 3,23,51,004 equity shares of Bhilwara Energy Ltd. from other shareholders for a consideration of Rs 162.05 Crores and post the above acquisition of shares, the holding of Company in BEL, was increased from 29.48% to 49%.
During the year 2022-23, the Company incorporated a whollyowned subsidiary in the name of TACC Limited.